Mild weather boosts U.S. job growth; jobless rate ticks up
8-02-2020, 15:54

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WASHINGTON (Reuters) - U.S. job growth accelerated in January, with unseasonably mild temperatures boosting hiring in weather-sensitive sectors, indicating the economy will probably continue to grow moderately despite a deepening slump in business investment.

The Labor Department’s closely watched monthly employment report on Friday, however, showed the economy created 514,000 fewer jobs between April 2018 and March 2019 than originally estimated.

The strong start to 2020 is a boost to President Donald Trump who is seeking a second term in office in the Nov. 3 election, but the biggest downgrade to payrolls over a 12-month period since 2009 showed the labor market was not as robust as the Republican president has boasted.

“Strong job creation in January provided reassurance that the record-long economic expansion still has room to run,” said Lydia Boussour, a senior U.S. economist at Oxford Economics in New York. “But this latest health report also points to a maturing labor market, with benchmark revisions showing it isn’t as youthful as it has pretended to be over the last two years.”

 

Non-farm payrolls increased by 225,000 jobs last month, with employment at construction sites increasing by the most in a year amid milder-than-normal temperatures, the government’s survey of establishments showed. There were also strong gains in hiring in the transportation and warehousing industry.

Economists polled by Reuters had forecast payrolls would rise by 160,000 jobs in January. Some said the unusually warm weather was likely throwing off the model the government uses to strip out seasonal fluctuations from the data, juicing the numbers. With the coronavirus hitting the Chinese economy hard, U.S. payrolls growth could slow in the coming months.

 

The Federal Reserve on Friday flagged the coronavirus as a risk to the U.S. economy.

 

“Until it is clear that the hiring was due to an upward shift in the overall economic growth rate, we have to assume that there are weaker numbers coming sometime during the next few months,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

 

The economy grew 2.3% in 2019, the slowest performance in three years, after logging 2.9% growth in 2018. Growth this year is seen around 2%. The benchmark revisions left job gains in 2019 at 2.1 million, the fewest since 2011.

 

Trump, speaking ahead of a trip to North Carolina, described the job numbers as “fantastic” and added that “jobs continue to be great, our country continues to do great.”

 

U.S. House of Representatives Speaker Nancy Pelosi, a Democrat, said the sharp downgrade to payrolls in the 12 months through last March “shows the rot at the heart of the Trump economy.” She noted that “three years in, the Trump economy is creating 42,000 fewer jobs a month on average than the last three years of President Obama.”

 

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